Question 1

If the quantity supplied is the same regardless of price, then supply is

Accepted Answer

A)  elastic.
B)  perfectly elastic.
C)  perfectly inelastic.
D)  inelastic.E) B) and C)
F) A) and B)

Question 2

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

Accepted Answer

A)  Because gasoline is a necessity, consumers do not decrease their quantity demanded in either the short run or the long run.
B)  Consumers react to a 10% increase in price with about a 10% decrease in quantity demanded in both the short run and long run.
C)  Consumers decrease their quantity demanded more in the short run than in the long run.
D)  Consumers decrease their quantity demanded more in the long run than in the short run.E) All of the above
F) C) and D)

Question 3

Which of the following is likely to have the most price elastic demand?

Accepted Answer

A)  clothing
B)  blue jeans
C)  Tommy Hilfiger jeans
D)  All three would have the same elasticity of demand because they are all related.E) C) and D)
F) B) and C)

Question 4

Figure 5-18 
-Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

Accepted Answer

A)  0.50
B)  0.56
C)  1.80
D)  2.00E) A) and C)
F) B) and D)

Question 5

A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

Accepted Answer

A)  0.37, and supply is elastic.
B)  0.37, and supply is inelastic.
C)  2.71, and supply is elastic.
D)  2.71, and supply is inelastic.E) None of the above
F) All of the above

Question 6

Table 5-4
The following table shows the demand schedule for a particular good. 
-Refer to Table 5-4. Using the midpoint method, when price rises from $8 to $12, the price elasticity of demand is

Accepted Answer

A)  0.4
B)  1
C)  1.5
D)  2.33E) A) and D)
F) B) and C)

Question 7

For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  There are many close substitutes for this good.
B)  The good is a luxury.
C)  The market for the good is broadly defined.
D)  The relevant time horizon is long.E) A) and B)
F) All of the above

Question 8

Figure 5-11 
-Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Accepted Answer

A)  decrease in total revenue of $200, so the price elasticity of demand is greater than 1 in this price range.
B)  decrease in total revenue of $200, so the price elasticity of demand is less than 1 in this price range.
C)  decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range.
D)  decrease in total revenue of $120, so demand is elastic in this price range.E) B) and C)
F) A) and B)

Question 9

Supply tends to be more elastic in the short run and more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 10

If the income elasticity of demand for a good is negative, then the good must be an inferior good.

Accepted Answer

A) True 
 B)False

Question 11

If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

Accepted Answer

A)  0.5, and supply is elastic.
B)  0.5, and supply is inelastic.
C)  2, and supply is inelastic.
D)  2, and supply is elastic.E) None of the above
F) All of the above

Question 12

Figure 5-12 
-Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

Accepted Answer

A)  The price increases from $15 to $21.
B)  The price increases from $18 to $21.
C)  The price decreases from $24 to $18.
D)  The price decreases from $27 to $24.E) C) and D)
F) None of the above

Question 13

An advance in farm technology that results in an increased market supply is

Accepted Answer

A)  good for farmers because it raises prices for their products but bad for consumers because it raises prices consumers pay for food.
B)  bad for farmers because total revenue will fall but good for consumers because prices for food will fall.
C)  good for farmers because it raises prices for their products and also good for consumers because more output is available for consumption.
D)  bad for farmers because total revenue will fall and bad for consumers because farmers will raise the price of food to increase their total revenue.E) C) and D)
F) B) and D)

Question 14

Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

Accepted Answer

A) True 
 B)False

Question 15

Farm programs that pay farmers not to plant crops on all their land

Accepted Answer

A)  hurt farmers by lowering their total revenue and hurt consumers by causing shortages of some food items.
B)  help farmers by cutting costs, which helps consumers by lowering food prices.
C)  help farmers by increasing total revenue in the market but hurt consumers by raising food prices.
D)  help farmers directly since they receive government payments but have no real effects on consumers.E) C) and D)
F) B) and D)

Question 16

Table 5-9
​ 
-Refer to Table 5-9. Which of the three supply curves represents the most elastic supply?

Accepted Answer

A)  supply curve A
B)  supply curve B
C)  supply curve C
D)  There is no difference in the elasticity of the three supply curves.E) C) and D)
F) A) and B)

Question 17

If the price elasticity of supply is zero, then

Accepted Answer

A)  supply is more elastic than it is in any other case.
B)  the supply curve is horizontal.
C)  the quantity supplied is the same, regardless of price.
D)  a change in demand will cause a relatively small change in the equilibrium price.E) A) and B)
F) A) and C)

Question 18

Figure 5-5 
-Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

Accepted Answer

A)  $100.
B)  $450.
C)  $500.
D)  $1250.E) A) and B)
F) B) and C)

Question 19

Table 5-5 
-Refer to Table 5-5. When price is between $5 and $9, demand is

Accepted Answer

A)  elastic.
B)  unit elastic.
C)  inelastic.
D)  There is not enough information given to determine whether demand is elastic, unit elastic, or inelastic.E) All of the above
F) C) and D)

Question 20

Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

Accepted Answer

A)  buyers tend to be much less sensitive to a change in price when given more time to react.
B)  buyers tend to be much more sensitive to a change in price when given more time to react.
C)  buyers will have substantially more real income over a ten-year period.
D)  the quantity supplied of gasoline increases very little in response to an increase in the price of gasoline.E) None of the above
F) B) and D)

Exam 5: Elasticity and Its Application

Which of the following statements about the consumers' responses to rising gasoline prices is correct?

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Table 5-4 The following table shows the demand schedule for a particular good. -Refer to Table 5-4. Using the midpoint method, when price rises from $8 to $12, the price elasticity of demand is

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Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.

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Figure 5-12 -Refer to Figure 5-12. Which of the following price changes would result in no change in sellers' total revenue?

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If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is about

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Table 5-5 -Refer to Table 5-5. When price is between $5 and $9, demand is

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Supply tends to be more elastic in the short run and more inelastic in the long run.

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Figure 5-11 -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

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If the income elasticity of demand for a good is negative, then the good must be an inferior good.

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If the price elasticity of supply is zero, then

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An advance in farm technology that results in an increased market supply is

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Figure 5-18 -Refer to Figure 5-18. Using the midpoint method, what is the price elasticity of supply between $4 and $5?

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Table 5-9 ​ -Refer to Table 5-9. Which of the three supply curves represents the most elastic supply?

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For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

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Figure 5-5 -Refer to Figure 5-5. At a price of $10 per unit, sellers' total revenue equals

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A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t-shirt maker would be willing to supply 100 t-shirts. Using the midpoint method, the price elasticity of supply for t-shirts is about

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If the quantity supplied is the same regardless of price, then supply is

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Which of the following is likely to have the most price elastic demand?

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Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because

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Farm programs that pay farmers not to plant crops on all their land

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Table 5-9 -Refer to Table 5-9. Which of the three supply curves represents the most elastic supply?

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